(Reuters) - Global stock markets fell for a third straight day on Thursday and the U.S. dollar hit a 10-week low against the yen as investors extended selling on worries about an end to central bank stimulus measures that have buoyed many asset markets.
But Wall Street rebounded and oil prices recovered after the United States reported stronger-than-expected retail sales and jobless claims, which suggested signs of resilience in the economy.
Investors are trying to gauge when central banks around the world, particularly the Federal Reserve, which meets next Tuesday and Wednesday, will pull back on their accommodative monetary policies.
Japan's Nikkei .N225 fell 6.4 percent - its second-biggest daily drop in more than two years.
Concern about a sooner-than-expected winding down of central bank liquidity mounted after recent comments from Federal Reserve Chairman Ben Bernanke and a decision by the Bank of Japan to hold off on easing further. It has fueled a selloff in global equities, emerging markets, risky bonds and commodities, while driving the safe-haven yen sharply higher.
"The easy money helped us on the way up. The concern is mounting it's going to end," said Andre Bakhos, director of market analytics at Lek Securities in New York.
"The action has been choppy and erratic," he said. "It's a case of investors looking to limit exposure ahead of next week's Fed meeting."
The MSCI All-Country World Index .MIWD00000PUS fell 0.2 percent to 360.89, moving further away from a five-year peak set last month.
Emerging equities .MSCIEF hit 11-month lows. Most emerging currencies remained under heavy pressure, with the Indian rupee falling to a record low.
The Dow Jones industrial average .DJI gained 53.26 points, or 0.36 percent, at 15,048.49. The Standard & Poor's 500 Index .SPX was up 6.88 points, or 0.43 percent, at 1,619.40. The Nasdaq Composite
European shares .FTEU3 fell more than 1 percent before recovering to end little changed as bargain-hunters picked up hammered mining and banking stocks.
"If you look at it historically, there has never been a period when the Fed has started to take back stimulus that has left the markets untouched," said Hans Peterson, global head of investment strategy at Swedish bank SEB.
"And this time it is a bigger exercise. We have moved markets from 2009 to 2013 on stimulus and now we are trying to take a step into a world which is more driven by natural growth. That transition will not be easy."
YEN REBOUND
Tokyo's stocks slide rattled markets and left Asian shares at their lowest level of the year. <.
The dollar lost 1.6 percent against the yen as investors spooked by the dive in Japanese equities unwound bets the yen would weaken. It fell as low as 93.78 yen, its lowest since April 4, giving back almost all the gains made since the Bank of Japan's aggressive monetary easing was announced on that day.
The euro lost 1.7 percent 125.80 yen, while against the dollar, it fell 0.1 percent to $1.3281.
"This week's BOJ meeting, which offered no new policy initiatives or stimulus programs, was the catalyst for the rapid change in sentiment in the foreign exchange market," said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York.
Brent crude rose 45 cents to $103.94 a barrel, having traded as low as $102.75 on reports indicating weak demand, including a cut in the outlook for global economic growth by the World Bank.
U.S. crude rose 5 cents to $95.93 a barrel.
Spot gold fell 0.7 percent to $1,379.16 an ounce.
Investors headed for traditional safe-haven government debt. The benchmark 10-year U.S. Treasury note was up 12/32, the yield at 2.1848 percent. German government bonds had their biggest gains in a week.
The recent selling of euro zone periphery debt also resumed, and Italy's borrowing costs rose at an auction of three-year debt, although yields at a parallel 15-year sale were little changed. <GVD/EUR>
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